Steps towards Equality for Puerto Rico

Posted March 9, 2019

With the introduction of new tax and health care related legislation and a recent announcement by the Bureau of Economic Analysis, U.S. federal government appears to have taken some steps towards equality for Puerto Rico.

On March 7, Senators Bob Menendez (D-NJ) and Marco Rubio (R-FL) filed a bill which would give parents in Puerto Rico equal access to the Child Tax Credit. Currently, families in Puerto Rico receive this credit only for their third child or subsequent children. Puerto Rico has one of the lowest birth rates in the United States, so the majority of families do not receive the Child Tax Credit. In the States, parents can claim this credit for all of their children.

“There is zero justification for treating any American citizen as second class based solely on their zip code, let alone when we are talking about the ability for struggling families to care for their children,” said Menendez.

On February 25, Representative Stacey Plaskett (D-USVI) filed a bill that will give U.S. territories equity with states under Medicaid and Medicare. She was joined by Rep. Nydia Velazquez (D-FL), Rep. Jose Serrano (D-NY) and fellow territorial Representatives González-Colón (R-PR), Aumua Amata Coleman Radewagen (R-AS) and Michael San Nicolas (D-GU).

At present, states can receive an unlimited amount of Federal Medicaid funding provided that they contribute matching funds, but Puerto Rico receives a block grant with a cap — a predetermined limited amount of federal funding. States also receive a much higher proportion of Medicaid federal funding. If Puerto Rico were a state, it could receive as much as 83% of its Medicaid costs from the federal government. Instead, the Island receives 55% until the cap is reached, and none at all after that. Estimates of the amount of the total cost covered by the federal government are as low as 13%.

The bill also deals with outdated Medicare funding formulas for hospitals in territories, and other funding issues that have left the territories in serious medical funding situations, especially following Hurricane Maria. Doctors have been leaving the territories in large numbers.

As these two bills await congressional consideration, the Bureau of Economic Analysis announced that it will begin to analyze economic data such as consumer activity, investments, and trade in Puerto Rico.

For years, Puerto Rico has produced its own estimate of economic activity. Starting in 2011, at the Puerto Rican government’s request, BEA has provided technical assistance to improve and modernize Puerto Rico’s economic data.

The Bureau of Economic Analysis plans to produce new economic data for Puerto Rico this year that could lay the groundwork for later estimating the island’s gross domestic product (GDP).

BEA plans to develop and publish later this year estimates for specific components that would feed into Puerto Rico’s GDP, such as consumer spending, business investment, and trade in goods. Estimates for these components will cover 2012 through 2017 and will be available in current dollars and on an inflation-adjusted basis.

BEA does not plan to produce a topline GDP number for Puerto Rico during 2019. But this project will be a major step toward the goal of producing GDP figures at some point in the future.

For years, Puerto Rico has produced its own estimate of economic activity. Starting in 2011, at the Puerto Rican government’s request, BEA has provided technical assistance to improve and modernize Puerto Rico’s economic data.

The island, however, suffered devastating damage in 2017 from Hurricane Maria, exacerbating its financial troubles. Those events underscored the need for a more modern set of statistics, adhering to international economic accounting standards, that could be used to better inform policymaking related to recovery efforts.

BEA currently produces GDP and related statistics for American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, and the U.S. Virgin Islands as well as the 50 states.

The Congressional Task Force on Economic Growth in Puerto Rico recommended in 2016 that “in the same way that the U.S. Department of Interior is funding BEA’s efforts to estimate GDP for each of the smaller territories, the federal government should fund BEA’s efforts to calculate GDP for Puerto Rico.”